IMF mission to Ukraine extended for 7-10 days, MinFin says

Ukraine is in the active negotiating stage with the
IMF in its current stand-by arrangement loan program, Finance Minister Serhiy
Marchenko told a television news network on Jan. 28. He said the IMF’s mission
to conduct the first review under the program has been extended for another
7-10 days. He expressed his hopes the Ukrainian side will be able to finalize a
memorandum with the fund and will “understand clearly what commitments we can
make.” He added that the question on the timing of a new IMF tranche is
secondary, while “the main thing is that Ukraine is gradually fulfilling all
its commitments.”

Marchenko also confirmed that the IMF is concerned
about the government’s decision to introduce a price cap on natural gas
for February-March. While the IMF understands the importance of interim price
caps to protect consumers, the fund is asking for a clear model so that such a
situation doesn’t repeat itself in the future, Marchenko said.

Recall, the IMF mission to conduct the first review
under the IMF’s SBA loan program started in late December.
Ukraine should have passed the second review and received the third tranche in
December 2020, according to the initial schedule of the SBA program for USD 5.2
bln, approved in June 2020.

Alexander Paraschiy: We agree
with Marchenko’s comments that it’s more important to stay within the IMF
program than to talk about the timing of the next tranche. At the same time,
its’s disturbing that Ukraine has yet to agree to its commitments under the
program, meaning there are some issues that are disturbing the fund. And we’re
confident gas pricing is definitely not the worst among them. This is in line
with our view that the probability of Ukraine securing the next tranche in 1Q21
is less than 50%. Moreover, it looks wiser now to talk about the likelihood of
the next tranche arriving in 2Q21, which we view as likely.